For long-term wealth builders, the National Pension System (NPS) has just become even more attractive! Effective October 1, 2025, non-government NPS subscribers now have the exciting opportunity to allocate a full 100% of their contributions into equities. This marks a significant shift from the previous maximum of 75% equity exposure, opening doors for potentially higher growth for investors seeking aggressive portfolio strategies within their retirement savings. This expanded flexibility comes under the new Multiple Schemes Framework (MSF), allowing pension fund managers to craft tailored schemes that maximize equity allocation.
This enhanced equity exposure is facilitated through specially designed schemes. For instance, new offerings like the SBI PF NPS Jeevan Swarna Retirement Yojana and the Tata Pension Fund NPS Smart Retirement Fund are built to invest a substantial portion, potentially up to 100%, in equities. These innovative schemes also offer a small allocation (up to 5%) to alternative assets, providing a blend of high-growth potential and diversified investment avenues. Previously, even under the "aggressive" auto-choice option, equity exposure was capped at 75%, making this new development a game-changer for those with a higher risk appetite and a long investment horizon.
However, it's crucial to note that this new 100% equity allocation isn't universally available. Government employees and subscribers to NPS Vatsalya – the scheme designed for children under 18 – are not eligible for these aggressive equity options. The exclusion of NPS Vatsalya is primarily due to its unique structure, which prohibits withdrawals before the age of 18 and lacks a premature exit provision, unlike the new schemes that typically have a 15-year vesting period. While experts acknowledge that younger investors generally benefit most from equity exposure due to their longer time horizons, the inherent differences in withdrawal rules and vesting periods between NPS Vatsalya and the new MSF schemes currently prevent its inclusion.
